How Consumer Behavior in the Philippines Shapes Supply Chain Management

Economic changes are impacting many areas of consumer life. It also determines consumer consumption and purchasing behavior. Consumers report a variety of behavioral changes related to their shopping habits, especially in recent years when economic conditions have changed significantly globally. During a recession, consumers change their purchasing behavior, reducing or limiting their purchases due to financial concerns. They focus on specific products that they consider essential to survival. Due to the unfavorable economic environment, consumers will continue to cut spending until they are financially stable. Changes in the economy are driving consumers to change their spending and purchasing habits, from a luxurious lifestyle to a modest lifestyle or vice versa.

Consumer Behavior in the Philippines

Consumers in the Philippines particularly, remains to be a challenge for marketers. According to a research, Filipinos have distinct purchasing habits where in general, they prefer to purchase items that are on sale. Filipino consumers are intelligent and always want more value for their money.

After the lockdowns, quarantines and health protocols, they become more aware and conscious of their health and financial wellness. Forcing them to change and adjust the way they are spending, what are they spending on, and what do they value.

Factors that affect consumer behavior

In the face of this post-pandemic world, consumers were able to redefine who they are and what really matters to them. In fact, according to an Accenture survey released in July 2022, 60% out of 25,000 global consumers told that their priorities are changing based on global events. Consumers make self-contradictory choices when balancing these changes with everyday usability. Factors that affect their choices are:

1. Product Customization and Brand Loyalty

Majority of consumers are willing to pay more for a customized product. An article from Harvard Business Review once said that “Customers come to think of a product as an extension of themselves.” Customers value products that are tailored to their wants and needs. In other words, a business that offers customization can improve customer experience and increase engagement or customer loyalty, drive sales and profit. Though it might be a big investment or a complicated process, the value of this strategy goes beyond customer satisfaction.

2. Preference for local products

This health crisis has increased awareness and desire among Filipino consumers to support local entrepreneurs. More and more people are buying locally made goods and products to boost their local economy. According to a research, 56% of consumers buy from neighborhood or local stores to actively support national products or discover authentic and artisan goods.

Aside from that, with almost all households on a tight budget, Filipino consumers are looking for cost-effective products and services. Brands are less important than the quality and value consumers get from their purchases nowadays.

3. Growing online shopping

In terms of where to buy, government home quarantine measures have complicated offline shopping channels for consumers, making online purchases increasingly common. In particular, consumers are gradually adopting the habit of buying some of their daily necessities online. At the same time, the rapid development of social media has made shopping more convenient for consumers. Hence, when consumers shop on social platforms, they can choose their favorite products more quickly since information is available at the click of a button, making it easier for consumers to compare their products and services with others in the market. As the number of consumers on social platforms increases, the number of offline consumers will correspondingly decrease. Consumer offline shopping activity is declining, but consumers are becoming more sophisticated when it comes to where to shop offline. To reduce the risk of infection, consumers pay more attention to the safety, convenience and goodwill of the places they shop when shopping offline. As a result, consumers have also changed significantly in terms of where they buy.

4. Demand for fast delivery

When it comes to purchasing timeframes, technological advances have increased consumer awareness of the value of time. The new shopping habits that consumers have adopted have made them more sensitive to time than they were before. Consumers expect the fastest way to get goods and, making shopping more efficient. The development of Internet technology, automation to deliver the product requirements with speed and the popularization of mobile devices have made it possible for consumers to satisfy their desire to shop anytime, anywhere. Therefore, consumers prefer shopping methods with unlimited purchase time and short purchase periods. Regarding purchasing methods, consumers choose contactless delivery methods based on their safety needs to avoid contact with unsafe external services and reduce the risk of infection. Contactless delivery methods can effectively relieve anxiety for consumers and keep order in their daily lives smoothly.

How Consumers affect Supply Chain Management

Consumers are key factors in the creation of supply chain as their needs and opinions majorly contributes to the supplier’s decision. Over time, companies have evolved from a performance-focused, product-centric approach to a customer-centric strategy aimed at prioritizing experience. But now the dynamics are more complicated. Businesses must accept their customers as changing, complex people who are greatly influenced by unpredictable external factors.

Looking across the lives of our customers means finding ways to respond to changing cultural and social norms related to technology.

Instead of treating customers as mere ‘buyers’, businesses must recognize them as multi-faceted people who are constantly changing, fulfilling many roles, each offering new opportunities for added value.

Businesses also need a better understanding of the forces that most profoundly impact the lives of their customers. Customer analytics alone is no longer enough. Monitoring technological, cultural, political, health, environmental and economic changes should be part of the process. Companies that can anticipate and respond to changing consumer needs and preferences are more likely to succeed in the market. Visit The Supply Advisory to learn more.

Patrick Velasco is the Associate Director at The Supply Advisory, a leading executive recruitment firm specialising in Procurement & Supply Chain.

You can view the The Supply Advisory website or contact them directly at info@supplyadvisory.com for a more detailed discussion.